Required: Explain your answer to the following questions: 1. Which fundamental ethical principles in ISA 200 will be affected in this scenario? You can explain more than one ethical principle, if applicable. 2. Is there a conflict between financial interest of the firm and proper judgment? Explain your opinion. 3. Explain the impact of this situation to your firm? 4. What could be the possible course of action? the answer should be pased on International standard of auditing .

Question No 1: (3+2+2+3=10 Marks) You are a partner in an auditing firm. One of your clients is Noor Company, which has been very successful since it first became your firm's client 8 years ago. It has sales of about OMR 5 million per year. Every year, Noor Company pays an auditing fee of OMR 20,000 to your firm, a significant Page 3 FRAMDAMAN SEMESTERACAO DVICE portion of your firm's income. Last year, after the audit work has been completed in December, Noor Company suffered a big amount of losses due to losing a few contracts from its major customers, The directors approached you immediately, and were very open about the company's cash flow problem. Therefore, you agreed that payment of the audit fee of OMR 20,000 could be spread over four months, since they are your major client and has long been with your firm. Before the current year's audit begin, directors of Noor Company approached you again asking for help to hide the company's cash flow problem for this year's audit report. They told you that their company is suffering only a temporary setback and will be able to recover soon. The directors are worried that if you disclose their cash problem, more investors could back out and lose interest in the company. You know that the company has not been able to pay the audit fee in 4 months as agreed upon, however you still want to help them. RAMLAMMATIONS VESTES ACADEMICIAR Required: Explain your answer to the following questions: 1. Which fundamental ethical principles in ISA 200 will be affected in this scenario? You can explain more than one ethical principle, if applicable. (3 marks) 2. Is there a conflict between financial interest of the firm and proper judgment? Explain your opinion. (2 marks) 3. Explain the impact of this situation to your firm? (2 marks) 4. What could be the possible course of action? (3 marks) Question No 2: Marks) (2x5-10